From the inception of operations to December 31, 20X4, Maharlika Corporation provided for uncollectible accounts receivable under the allowance method: provisions were made monthly at 2% of credit sales; bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account and no year end adjustments were made to the allowance account. Maharlika's usual credit terms are net 30 days. The balance in the allowance fro Bad Debts account was P 143,000 at January 1, 20x4. During 20x4, credit sales totaled P 15,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P 140,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P 43,000. Maharlika installed a computer facility in November 20x4 and an aging of accounts receivable was prepared for the first time as of December 31, 20x4. A summary of the aging is as follows: Classification by month of sale Balance in each category Estimated % Uncollectible November-December 20x4 P 2,160,000 2% July-October 20x4 1,300,000 10% January-June 20x4 840,000 25% Prior to January 20x4 300,000 70% Total P 4,600,00 Based on the review of collectibility of the account balances in the "prior to January 20x4" aging category, additional receivables totaling P 120,000 were written off as of December 31, 20x4. The 70% uncollectible estimate applies to the remaining P 180,000 in the category. Effective with the year ended December 31 20x4, Maharlika adopted a new accounting method fro estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable. For the year ended December 31, 20x4, Maharlika's bade debts expense would be?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
From the inception of operations to December 31, 20X4, Maharlika Corporation provided for uncollectible accounts receivable under the allowance method: provisions were made monthly at 2% of credit sales;
The balance in the allowance fro Bad Debts account was P 143,000 at January 1, 20x4. During 20x4, credit sales totaled P 15,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P 140,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P 43,000. Maharlika installed a computer facility in November 20x4 and an aging of accounts receivable was prepared for the first time as of December 31, 20x4. A summary of the aging is as follows:
| Classification by month of sale | Balance in each category | Estimated % Uncollectible |
| November-December 20x4 | P 2,160,000 | 2% |
| July-October 20x4 | 1,300,000 | 10% |
| January-June 20x4 | 840,000 | 25% |
| Prior to January 20x4 | 300,000 | 70% |
| Total | P 4,600,00 |
Based on the review of collectibility of the account balances in the "prior to January 20x4" aging category, additional receivables totaling P 120,000 were written off as of December 31, 20x4. The 70% uncollectible estimate applies to the remaining P 180,000 in the category. Effective with the year ended December 31 20x4, Maharlika adopted a new accounting method fro estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.
For the year ended December 31, 20x4, Maharlika's bade debts expense would be?
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